A Finance Lease is often used when assets are less susceptible to rapid technological change or have extremely long effective lives. For industries and types of equipment that are more exposed to technological change, or when the equipment is business critical, a Rental facility (or Operating Lease) is usually the better option.
- Full Use, at a Known Cost
Under a Finance Lease, you have full use of the equipment during the term. You have the security of a predictable monthly payment, with a known residual value at the end of the term. In addition, there is no initial capital outlay, so you'll have immediate access to the equipment without a large up-front cost.
- End of Term Options
At the end of the Finance Lease term, you can take ownership of the equipment simply by paying the stated residual value.
- Tax Effective Asset Management
While a leased asset and lease liability does appear on your Balance Sheet, the full Finance Lease payment is tax-deductible so long as the equipment is used for your business (this may be different for luxury motor vehicles). GST is charged on the monthly lease rental and on the residual value at the end of the lease. If you are registered for GST, you can claim the relevant amount of GST paid on your next Business Activity Statement.*
At Classic Funding Group, our expert staff will work with you to build a solution to help you get the equipment you need to grow your business. We tailor each equipment finance solution specifically to the needs and capacities of each client. Contact us on 1300 780 895 to discuss your equipment and the finance solution that best suits you.
*We do not provide financial advice. You should obtain your own financial advice on the tax and accounting treatment of any finance solution you choose.